Currency market: EUR/USD, NZD/USD, AUD/USD, XEU and ECU

Brian Twomey Brian's Investment

Since NZD/USD broke below its 5 year average at 0.6843 in November, lows achieved 0.6702 or 141 pips then rose 138 pips to 0.6840 highs. NZD/USD at current 0.6809 is right back where it began in November.

NZD/USD higher must break 0.6841, 0.6856 and 0.6888. The target below is located at 0.6503 and the same reported target written in November. Problem with the 0.6503 target is higher averages above 0.6841 target 0.6769 and 0.6742. NZD/USD has every ability to achieve 0.6503 but higher averages must follow and currently averages are rising and the same situation for EUR/USD and AUD/USD.

Rather than oversold or overbought, NZD/USD just exists doing nothing. Most vital however as NZD/USD represents the bottom currency and signal pair, a break above 0.6841, 0.6856 and 0.6888 then the target at 0.6503 is nullified as higher targets become 0.6911, 0.6979 and 0.7053.

As bottom currency and signal pair, NZD/USD break above 0.6841, 0.6856 and 0.6888 cancels a lower EUR/USD and AUD/USD as the rear guard forces EUR/USD and AUD/USD higher.

NZD/CHF and correlations to NZD/USD is a further prevention for an NZD/USD drop as NZD/CHF at current 0.6256 is oversold and any further drops then NZD/CHF achieves the richter scale to oversold.

EUR/USD

EUR/USD's target at current 1.1049 is derived from its 5 year average now at 1.1508 and rising. Longer dated averages in the 1.1500's and rising are deeply oversod and prevents a significant EUR/USD drop. EUR/USD big break is located at 1.1451 and an average neither rising or falling over many weeks. Above 1.1451, contends with 1.1.508, 11568 and 1.1573.

EUR/USD seasonals

EUR/USD not only enters its seasonal downtrend, January is a huge EUR month. Dating to 1995, EUR/USD records 15 down months for January and 8 up months. For 2019 ended the month with a Doji candle.

XEU and ECU exchange rates

A quick aside to prior 1998 exchange rates. USD/DEM as the German currency ruled Europe as the EUR/USD performs its tasks today. USD/DEM was separated from the European XEU basket then factored using ECU exchange rates to transfer the proper exchange rate number from USD/DEM to EUR/USD.

Any students of the markets remaining today and dying to see XEU and ECU calculations and how it was all factored, see FXstreet and my blog btwomey.com for deep details as I performed and showed the necessary calculations. The same principle holds from 2012 when Greece threatened to leave the European Union and the Greek Drachma was repriced as EUR/GRD at 312.00.

EUR/USD and ranges

For interested, on my blog is a range comparison from MA's 5 to 253 days then from 5, 10 and 14 year averages. Compared with averages from 2005 to 2021 are targets for every average. Since 2005, EUR/USD ranges dropped by slightly more than 1/2.

AUD/USD

AUD/USD's big break is located at 0.7255, 0.7259, 0.7304 at the 5 year average and 0.7368. The target at current 0.6896 for the most part achieved target at low 0.6900;s then AUD/USD rose to current 0.7200's. Similar to NZD/USD, AUD/USD dropped 400 pips then rose 300 . Similar to EUR/USD, longer dated averages are massively oversold to force AUD/USD higher and a long only strategy much like EUR/USD and NZD/USD.

To achieve again the target at 0.6896 will take time as 0.7255 won't allow 0.6896 to trade without becoming richter scale oversold.

Author

Brian Twomey

Brian's Investment

Brian Twomey is an independent trader and a prolific writer on trading, having authored over sixty articles in Technical Analysis of Stocks & Commodities and Investopedia.

AUD/USD keeps range near mid-0.7100s as USD bulls await US CPI

AUD/USD steadies near mid-0.7100s in the Asian session on Friday, stalling the previous day's sharp decline to an over one-week low. The August PPI report reaffirmed Fed rate-hike bets and boosted the US Dollar on Thursday, which weighed heavily on the pair. However, hawkish RBA expectations limited losses for the Aussie as USD bulls now await the release of the US consumer inflation figures before placing fresh bets.

USD/JPY holds lower ground toward 154.00; looks to US CPI

USD/JPY holds lower ground toward 154.00 in the Asian session on Friday after hot Japanese PPI data bolster a more hawkish BoJ repricing and provide fresh impetus to the Japanese Yen. However, the downside appears capped as the US Dollar preserves overnight gains ahead of the latest US consumer inflation data.

Gold: Gains remain capped by $4,400

Gold regains composure and trades with decent gains on Friday, managing to refocus attention on the $4,440 mark per ounce troy. Therefore, the precious metal reverses Thursday’s decline as the US Dollar alternates gains with losses at the end of the week.

Ripple Price Forecast: XRP extends decline as returning ETF inflows fail to lift outlook

Ripple (XRP) falls below $1.33 on Friday, marking the third consecutive day of declines. The token continues to track the broader cryptocurrency market downturn, with investors closely monitoring heightened macroeconomic uncertainty ahead of the United States (US) Consumer Price Index (CPI) release and next week’s Federal Reserve (Fed) monetary policy decision.

Weekly focus – The hawks set the tone

Risky assets came under pressure this week as energy prices kept creeping higher and the ECB surprised the markets with a hawkish tone. The price of Brent crude touched USD 110 per barrel on Thursday night, highest since mid-May, as news emerged that the Yemeni Houthis had reached control of key port cities and islands near the Bab el-Mandeb strait.

Venezuela’s 65-billion-barrel Oil deal could reshape America’s inflation fight

The United States (US) has secured unprecedented access to part of Venezuela’s vast Oil reserves. The timing is particularly significant as the war with Iran is disrupting Middle Eastern supplies, keeping energy prices elevated and reviving concerns about inflation.